Zendesk Faces Investor Ire, Freshworks Prepares For IPO

Helpdesk automation service provider Zendesk (NYSE: ZEN) recently announced its third quarter results that surpassed market expectations. The company continues to invest in growing its market reach even as it faces the ire of its investors.

Zendesk’s Financials

Zendesk’s revenues grew 36% over the year to $210.5 million, ahead of the market’s forecast of $207.4 million. EPS was $0.12, significantly ahead of the Street’s estimated $0.06, and 33% more than $0.09 a year ago. It was a milestone quarter for Zendesk as it crossed the annualized revenue run rate of $800 million and ended the quarter with more than 150,000 paid customer accounts.

For the fourth quarter, Zendesk expects revenues of $226-$228 million with a non-GAAP operating income of $8-$10 million. It expects to end the current year with revenues of $813-$815 million with a non-GAAP operating income of $23-$25 million. The market was looking for revenues of $226.96 million for the quarter and $810.4 million for the year. Zendesk is hopeful of achieving its goal of $1 billion in revenues by the year 2020.

Zendesk’s Growth Focus

To continue to drive market expansion, Zendesk has been focused on product innovation. It recently launched Sunshine Conversations, an API-based platform that allows businesses to integrate messaging using social channels and directly interact with customers. The platform also allows developers to build messaging into their own apps and services so that customers can connect with companies over their own websites, social channels, and private in-app messaging services. It allows organizations to integrate conversations across every digital channel so that functions across the organization including sales, service, and marketing have the same context. The tool will allow end consumers to make payments, browse products, and book reservations within their preferred messaging system.

Earlier last month, Zendesk launched Gather, a new product that enables companies to provide trusted and transparent support to customers through online community forums. The service offers a space where customers can engage with each other and experts to seek and offer guidance and insight. The service will allow organizations to scale their customer service organization and leverage experts. Zendesk is hoping to attract more enterprise customers using this service.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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